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What is a poison pill?

  1. A A defence allowing existing shareholders to buy shares cheaply, diluting a hostile acquirer
  2. B A penalty clause in a contract
  3. C A tax liability
  4. D A regulatory restriction
Answer

A defence allowing existing shareholders to buy shares cheaply, diluting a hostile acquirer

It makes a hostile takeover prohibitively expensive without board cooperation, forcing negotiation with the board instead.

All Investment Banking MCQs

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